When is it good to get a reverse home mortgage and how to choose one?

Answer:

Reverse home mortgages are popular among senior homeowners. They help seniors supplement their income, meet unexpected medical situations, rehabilitate home and most importantly, with a reverse mortgage you cannot face foreclosure and lose your house. Repayment of the reverse mortgage is not required until the homeowner no longer lives in the house.

Requirements for Reverse Mortgages

Generally, in order to be eligible for a reverse mortgage you have to be a senior of age 62 and older, own your home or have only little balance left on the mortgage of your house which is usually paid off with the reverse mortgage, and be a permanent occupant of your home. Your property will be eligible if it is a 1-to-4 unit; some condominiums will be eligible if approved by your loan provider.

The amount you can borrow with a reverse mortgage does not depend on your income. Rather, it depends on your age, property appraised value and current market rates.

With a reverse mortgage, you do not make monthly payments - the loan is not due while you stay in the home, and you can't face foreclosure due to skipping a mortgage payment. Just the opposite, you will be receiving payments. Also, even if you outlive the loan, while you or any of the borrowers live in the house and pay property taxes and insurance, you don't have to repay the loan and will never owe more than initially borrowed.

With a reverse home mortgage, when you sell the house, the mortgage and all accompanying fees will be paid back to lender. The remaining equity will belong to you or your heirs. No debt will be handed down to your heirs.

Before signing a reverse mortgage, it is demanded you are counseled by a third party to make sure you understand every detail on the contract and all your rights and obligations. While the above is a most general information on reverse mortgages as per HUD, there are private lenders that may have additional requirements or clauses. It would be wise to contact HUD (Housing and Urban Development) to be referred to HUD-approved lenders and housing counseling agencies in proximity.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.